Schweitzer Staff Challenges Revenue Projections

By Beacon Staff

HELENA – The governor’s budget director challenged lawmakers on Monday for painting what he describes to be an artificially gloomy budget picture, arguing state coffers will have far more money left over than legislative staffers predict.

David Ewer told an interim committee of lawmakers it is now clear that more money was available than the Republican-led Legislature used for its budget earlier this year. Democrats said that money could have been used for many things, such as more state construction projects to spur job growth.

Ewer, who works for Democrat Gov. Brian Schweitzer, said Republicans were too willing to accept a low projection of tax collections in order to increase the need to cut spending. Ewer said it would have been better to have an honest projection of tax collections while determining the state’s two-year budget.

“It is my continued hope that we all want accurate revenue estimates. I hope that is the goal,” Ewer said. “I hear there is some praise for having them be conservative. I think accuracy is more important.”

Lawmakers estimate state revenue, heavily reliant on tax collections, in order to determine how much can be spent in the budget.

The Republican-led Legislature earlier this year finalized a budget deal with Schweitzer that runs from July 2011 to June 2013. Throughout the process, the two sides never agreed how much money would be available.

Ewer said it is already clear that his projections, showing more money would be available, are proving to be more accurate.

The Legislative Fiscal Division reported to lawmakers at the Monday meeting that their initial prediction that $150 million would be left over in June 2013 has been increased to $265 million.

Ewer said that is still too low by at least $50 million.

Republicans on the Revenue and Transportation Interim Committee counter that lawmakers were wise to guess low on revenue estimates, because the possibility of a second recession looms.

“I think we were correct to take a conservative view, keep the grain in the bin, as the governor says,” said Sen. Bruce Tutvedt, of Kalispell. “I think we were prudent and did the right thing.”

Democrats argued an accurate prediction would have allowed them to approve the pay increase the Schweitzer administration negotiated with state employees — a failed ratification that has led unions to file an unfair labor practice charge. The Democrats also wanted a bonding bill to launch a round of new building projects and fund other initiatives.

Ewer said recent tax collections continue to outpace estimates by a large margin.

“If we continue as a Legislature to accept the status quo methods, then I think you are at risk of having revenue estimates that are undercounted,” Ewer said. “And that is not good business.”